by David Prieto | April 2, 2025
The Science Based Targets initiative (SBTi) has released a long-awaited draft of its Corporate Net-Zero Standard (CNZS) Version 2.0. This comprehensive update addresses various challenges identified in the original framework and introduces new approaches to support companies in their decarbonization journeys. By understanding the key changes and implications of Version 2.0, companies can better navigate the transition to net-zero emissions and position themselves for success in a rapidly changing climate landscape.
Key Changes and Implications
1. Increasing Flexibility for Scope 3 Emissions
The new standard covers the entire decarbonization journey, from target-setting to maintaining net-zero status. It offers increased flexibility, particularly for Scope 3 emissions, allowing smaller companies to opt out of Scope 3 targets and introducing non-emissions targets for procurement activities. This shift from a “blanket approach” to Scope 3 reductions can help companies have more constructive dialogues on achieving net-zero emissions and managing associated costs.
2. Unlocking Decarbonization Impact through Market-Based Accounting
Version 2.0 introduces support for market-based accounting (referred to as “indirect mitigation”) strategies, expanding how companies can account for reductions. This change allows companies to use book-and-claim approaches, such as sustainable aviation fuel credits, to achieve Scope 3 Science-Based Targets (SBTs).
ClimeCo’s work with companies across the value chain – including some of the hardest-to-abate industries and the world’s largest consumer brands – highlights the potential of market-based solutions like insetting for scaling up emission reductions. ClimeCo is working alongside major brands on a first-of-a-kind pilot with the Advanced and Indirect Mitigation (AIM) Platform, which will engage SBTi on CNZS V2.0 draft to provide guidance on how to do this insetting (value chain decarbonization) credibly. Substantial pools of decarbonization opportunities are ready to go; just waiting to see a demand signal, for example, from ClimeCo’s clients in cement, chemicals, energy, maritime shipping, and other industries. This news from SBTi creates increased confidence to proceed even as the CNZS V2.0 undergoes revisions in the coming months and will unlock some decarbonization spending and activity, especially in the near term.
3. Incentivizing Beyond Value Chain Mitigation (BVCM)
The standard now provides stronger incentives for BVCM, enabling companies to take responsibility for their ongoing emissions by investing in climate action outside their own value chains. This change is expected to drive demand for high-integrity carbon credits and foster complementarity between SBTi guidance and the voluntary carbon market. With V2.0, SBTi now officially approves the use of offsets for removals targets.
4. Creating Near-Term Demand for Carbon Removals with Interim Targets
Version 2.0 introduces a structured approach to carbon dioxide removal (CDR), addressing a key gap in the previous standard. It proposes options for proactively addressing residual emissions, limited to Scope 1 emissions. This change could help scale the nascent CDR industry and encourage companies to take early action on removals.
It takes time to build and develop carbon removal projects,” said Erika Schiller, ClimeCo’s Senior Vice President of Project Development. “Having interim targets ensures that companies are acting sooner, investing over time, and giving the demand signals for the market supply to build up to meet the demand.
5. Refining Renewable Energy and Scope 2 Emissions Requirements
The new draft tightens requirements around Scope 2 emissions and the use of renewable energy credits, reflecting lessons learned from a decade of 100% renewable energy targets. This shift underscores the need for companies to adopt more rigorous approaches to renewable energy sourcing.
Looking Ahead: What You Can Expect
The draft CNZS Version 2.0 represents a significant update to the leading framework for corporate net-zero target setting – and it is currently open for public consultation until June 1, 2025. Stakeholders are encouraged to participate in shaping the future of corporate climate action by providing feedback during this initial phase. A Q&A webinar is scheduled for April 9, offering an opportunity to learn more about the proposed changes and ask questions directly to the SBTi team.
Following this consultation, the SBTi plans to refine the draft based on stakeholder input and release a revised version for pilot testing and another round of public consultation later this year. The aim is to finalize and launch Version 2.0 of the Corporate Net-Zero Standard by early 2026.
While the final standard is over a year away, businesses should act now to align their strategies with the emerging framework. Markets are already responding to the changes outlined in the draft, presenting opportunities for companies to lead in innovation, carbon removals, and BVCM rather than waiting for 2026 to make adjustments.
Why This Matters for Your Business
Companies that proactively engage with these changes stand to gain competitive advantages, including improved risk management, enhanced stakeholder trust, and potential revenue generation and cost savings through early adoption of the abovementioned strategies. Whether you’re a sustainability leader or just beginning your net-zero journey, understanding and adapting to these changes will be crucial for future-proofing your business.
ClimeCo’s experts can help your team understand V2.0’s implications for your business and support you in engaging in SBTi’s public comment period. Contact us to learn how we can help and watch our SBTi webinar here.
About ClimeCo
ClimeCo is an award-winning leader in decarbonization, empowering global organizations with customized sustainability pathways. Our team of respected scientists and industry experts collaborates with companies, governments, and capital markets to develop tailored ESG and decarbonization solutions. Recognized for creating high-quality, impactful projects, ClimeCo is committed to helping clients achieve their goals, maximize environmental assets, and enhance their brand. Partner with ClimeCo to drive meaningful environmental change and take your climate initiatives to new heights.
Contact us at +1 484.415.0501, info@climeco.com, or through our website climeco.com.
